Greater China Sales and Production Commentary- December 2022

06 January 2023
Gao Tao
Lin Huaibin

Greater China sales

November 2022: -11.5%; 2.11 million units vs. 2.38
million units

YTD 2022: +2.7%; 22.32 million units vs. 21.74 million

  • In November 2022, 2.11 million light vehicles were sold in
    Greater China, marking an 11.5% decrease compared with the same
    month of 2021. Specifically, light vehicle sales in mainland China
    decreased 11.8% from 2.34 million units in November 2021 to 2.06
    million units. Passenger vehicles recorded sales of 1.83 million
    units, a 9.0% decrease year on year (y/y), and light commercial
    vehicle (LCV) sales contracted 28.9% y/y to 0.23 million
  • On a year-to-date (YTD) basis, light vehicle sales in mainland
    China increased 2.8% from 21.31 million units to 21.91 million
    units. Precisely, passenger vehicle sales increased 7.6% y/y to
    19.32 million units, while LCV sales decreased 22.9% y/y to 2.6
    million units. Segment-wise, YTD sedan sales increased 11.1% y/y
    from 8.84 million units to 9.83 million units, and the sport
    utility vehicle (SUV) segment increased 4.7% y/y from 8.43 million
    units to 8.82 million units. YTD sales of multipurpose vehicles
    (MPVs) decreased 1.5% y/y to 0.68 million units.
  • Chinese auto sales in November were severely hindered by
    COVID-19 restrictions in China. The prolonged pandemic has slowed
    the country’s economic growth, with its GDP forecast to grow 2.8%
    in full-year 2022, much lower than the target set at the beginning
    of the year of 5.5%. Starting from the beginning of December, a
    raft of cities has begun to ease COVID-19 pandemic-related
    restrictions, after the central government urged local authorities
    to optimize pandemic-containment measures, including lifting
    lockdowns, reducing the frequency of mass testing, and allowing
    home quarantine for close contacts. The relaxing of containment
    policies has set the stage for a broader economic recovery from
    COVID-19 disruptions, although it will take time for consumer
    confidence to climb.
  • In November, sales of internal combustion engine (ICE) vehicles
    in the broader passenger vehicle market contracted by 30% y/y, with
    consumers turning to new-energy vehicles (NEVs). The strong growth
    in NEV demand is helped by government incentives, including
    subsidies and purchase tax exemption. Passenger vehicle sales in
    December may be helped by incentives provided by automakers in an
    attempt to clear inventories and boost year-end sales. The end of
    central government electric vehicle (EV) subsidies by the end of
    2022 will also help to convince customers to make their purchases
    within the year. In the fourth quarter, vehicle sales will be
    constrained by the resurgence of COVID-19 infections in the
    country. Automakers are trying to counter downward pressures in the
    domestic market with a renewed push for exports. In the year to
    date, NEV exports doubled y/y to nearly 600,000 units, and
    new-vehicle exports increased 55% y/y to 2.785 million units. In
    addition, the NEV purchase tax exemption will be extended into
    2023, while cities such as Shanghai will likely withdraw some of
    their preferential policies on plug-in hybrid electric vehicles
    (PHEVs) from 2023 to shift their focus to battery-electric vehicles
    (BEVs). We expect NEV penetration to edge close to 26% in 2022,
    supported by strong products.
  • With strong year-end stimulations and marked easing of COVID-19
    related restrictions, light vehicles sales should grow by 3.6% to
    24.76 million units in 2022, of which passenger vehicles are
    estimated to increase 7.7% y/y to 21.75 million units, while LCVs
    are forecast to decline 18.8% to 3.01 million units.

Greater China production

November 2022: -15.3%; 2.16 million units vs. 2.55
million units

YTD 2022: +8.6%; 23.85 million units vs. 21.97 million

  • Greater China’s light vehicle production in November recorded
    2.16 million units for a decline of 15.3% year on year (y/y). In
    mainland China, light vehicle production decreased 15.5% y/y to
    2.13 million units. The spread of COVID-19 in major industry cities
    led to light vehicle production losing momentum in mainland China
    in November after October’s golden purchasing season. Changan was
    hit in the first wave as all manufacturing facilities in Chongqing
    were shut down for 10 days in November. FAW-VW’s plant in Chengdu
    was also shut down temporarily at the end of November owing to
    local COVID-19 cases. Even production lines in Changchun plants
    were closed owing to supply shortages. These supply chain
    interruptions led to Honda’s plants in Wuhan shutting down for one
    week and will even affect global output from Japan.
  • The light vehicle production forecast for Greater China for
    full-year 2022 is set at 26.33 million units, marking a 6% y/y
    increase. In mainland China, light vehicle production will be 26.08
    million units for a 6.1% y/y increase. Heavily damaged by the
    November lockdown and potential supply interruption in December, we
    lowered the 2022 mainland China light vehicle production by 350,000
    units compared with the November forecast, leading to 6.1% y/y
    growth in the December forecast (1.5% lower than the November
  • The latest vehicle inventory alert (VIA) index, issued by the
    China Automobile Dealers Association (CADA), stood at
    65.3%—with an increase of 6.3% month on month (m/m) and 9.9%
    higher than in the same period of 2021—above the threshold. In
    November, the epidemic continued to expand, and the auto market
    sales performance fell short of expectations. Auto shows and
    marketing activities around the country could not be carried out
    smoothly owing to restrictions to help control the pandemic, and
    the auto market was relatively quiet. The release of pent-up
    consumer demand for cars was hindered by the closures of many
  • In November, production of passenger vehicles in Greater China
    decreased 10.9% y/y to 1.94 million units. Market segment-wise, car
    production stood at 0.9 million units with a 13.2% y/y decrease.
    Production of multipurpose vehicles (MPVs) increased 12.2% y/y to
    70,219 units. Production of sport utility vehicles (SUVs) decreased
    9.9% y/y to 0.97 million units. Plant closures due to COVID-19
    cases led to Changan suffering a 45% production loss of 400,000
    units in November. FAW-VW could build only 110,000 units, falling
    30% in November. On the contrary, motivated by an expiring subsidy,
    the new-energy vehicle (NEV) market maintained momentum in
    November. Tesla achieved sales of over 100,000 units, contributed
    by domestic demand for the Model Y and exportation of the Model 3.
    Thanks to a reliable in-house supply chain, BYD continued to
    dominate the passenger car market with industry output of over 2
    million units—127% y/y growth in November. The Dynasty series
    contributed a major share as the Han and Song plus surged up by
    145% and 125% y/y, respectively.
  • In November, light commercial vehicle production in Greater
    China posted 0.22 million units, falling 41.6% y/y. Market
    segment-wise, production of chassis-cabs stood at 0.11 million
    units, down 47.5% y/y. Production of vans stood at 78,565 units
    with a 32.2% y/y decrease. Pickups decreased 38.9% y/y to 28,203
    units. Full-year production should reach 2.96 million units for a
    23.9% y/y decrease.

This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.

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